Sanctions on Iran could push oil prices up 30pc, taking the price of Brent
crude to above $140 a barrel, the IMF has warned.

In a note to G20 deputies, the IMF said that sanctions by OECD nations could cut 1.5m barrels per day (bpd) from supplies, causing a "large effect on prices" unless replacement supplies were found.

"A halt of Iran's exports to OECD economies without offset from other sources would likely trigger an initial oil price increase of around 20pc-30pc, with other producers or emergency stock releases likely providing some offset over time," it said. Brent crude was trading at $110.64 a barrel yesterday.

Saudi Arabia has said it could "immediately" increase its production to compensate for any shortfall.

The EU voted on Monday to ban new oil export contracts from Iran, and to end existing contracts by July 1. Iran has threatened to retaliate by blocking the Strait of Hormuz, the main export route for supplies of about 17mbpd from the Middle East.

The IMF said the Strait's closure "could trigger a much larger price spike including by limiting offsetting supplies from other producers in the region".

Worried Iranians have been buying up dollars in response to the worsening foreign relations, causing Tehran to increase bank interest rates yesterday and indicate it might restrict the sale of foreign currency.